Research paper: The impact of unexpected flood events

To contribute to evaluating climate change consequences, we study a sequence of river floods and subsequent adaption measures in a natural experiment setting at the city of Dresden, Germany, from 2000 until 2017. Remarkable in this setting is the exogeneity of the first flood event in 2002 that hit the city unexpectedly after 60 years without considerable flood events. We use a complete set of lot transactions from 2000 until 2017 to study the effect of these events on lot prices in a Difference-in-Differences design in which we control for an unstable assignment to the treatment and control group. Additionally, we consider the heterogeneity of the treatment, which is caused by the varying intensity levels during a flood. It shows that flood risk is incorporated into lot prices only after awareness has risen due to a sudden flood event and that a higher expected intensity increases discounts. A long-term effect can be verified once we control for adaption, such as public protection measures. Review of Regional Research